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Housing Market Begins to Warm

Mortgage applications are up, a sign the housing market may be thawing, according to The Wall Street Journal (subscription). 

What’s going on: “The average 30-year home loan rate has come down by just about a full percentage point from a 20-year high above 7% in November, largely in response to signs that the Federal Reserve is nearly finished lifting rates. That has brought some new buyers into the market.”

  • Mortgage applications increased by approximately a quarter since the end of 2022, and the number of people contacting real-estate agents about looking at homes for purchase has risen since a November low.

Why it’s important: The housing market is seen as a proxy for overall economic health.

  • While the Federal Reserve has indicated that it will keep interest rates high until inflation comes down, some economists say the worst of the housing downturn is over.

What’s expected: Net housing sales are likely to increase from Q1 to Q2 of this year, according to homebuilder D.R. Horton Inc. Spring tends to bring more buyers and sellers, they said.

  • And “[r]eal-estate agents say buyers have adjusted to the reality that higher mortgage rates will eat up more of their monthly housing costs.”
  • Affordably priced homes, however, are expected to remain in relatively scarce supply this year.
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